It generally means - that a person is born within the sovreign's realm. Exceptions being those children born abroad of parents who are serving abroad in the sovreign's name ...
Given the ease of travelling these days, however, I think that the Founding Fathers would have relaxed that definition to include children born abroad to any parents [in the sovreign's service or not]. However, the foreign residency could not be permanent AND the parents would have to be US citizens ...
In fact I don't know if all countries allow the mother to transfer citizenship. I don't know enough about the law, but it's possible Kenya doesn't even recognize him as an American citizen simply because his father is Kenyan and the mother was American. If Kenya doesn't allow the mother to transfer citizenship, then in their eye, he's Kenyan.